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› Strata Laws Online Consultation: CLOSED

The New South Wales Government plans to commence a review of the State’s strata and community title laws in 2012, which may include significant amendments to the existing legislation. To support this reform, public policy think-tank Global Access Partners (GAP) is hosting an online community consultation on Open Forum to give individuals and businesses affected by the reforms an opportunity to voice their opinions, share their experiences, raise specific issues or concerns and suggest possible solutions. We invite your comments on the following questions:

The consultation is open to the general public as well as members of the strata community, including owners, tenants, strata agents, developers, surveyors, valuers, real estate agents, lawyers and academics who have experience and understanding of the current legislation, or specialist knowledge of the strata industry. Larger organisations and key stakeholder bodies are also invited to contribute.

Contributions close 29 February 2012. If you would like to receive updates following the consultation please contact us at strata@openforum.com.au.

DISCLAIMER: The comments published below represent a wide range of views and interests of the participating individuals and organisations. Statements made during online discussions are the personal opinions of the commentators and do not necessarily reflect those of the NSW Government or Open Forum. Open Forum, at all times and at its absolute discretion, reserves the right to remove offensive comments from the Strata Laws Online Consultation. For your reference, any comments/messages that are offensive for the online consultation would include any or all of the following: breach of privacy, defamatory content, profane content, risk of contempt of court, racial and religious hatred/vilification, confidentiality concerns.

Comments

I am lucky to live in a small strata unit where there are few areas of dissent. However I have experienced the power of one person obtaining 8 out of 13 votes by proxy and therefore controlling the votes on all issues. This resulted in fees being kept ridiculously low for years, resulting in insufficient sinking funds for current repair needs. Fortunately this person has moved on. I also live overseas part of the year and need to provide my proxy for the AGM. Proxy votes need to have limits set to a small percentage of the total vote, or allow absentee voting. Absentee voting is not a new concept. Think Federal elections!

Pets are always an issue whenever people are housed together in relatively small spaces like strata units. The ability to refuse all pets must go. Pet size and type can easily be controlled, and sanctions for excessive barking and fouling of common areas can be applied.

In my opinion the use of company structure for shareholders of company title to home units is way past use-by date.

There must be compulsory conversion from company title to strata title to provide stakeholders with all the advantages strata title provides including a higher resale value and a wider market of buyers related to mortgage financing benefits via ownership of individual home units as compared with the right to occupy a particular home unit in a company structure.

I understand that there can be issues between stakeholders and tenants in a strata plan however in companies the usually unpaid directors are able to maintain secrecy and be far less transparent in dealing with management of the company and not keeping shareholders fully informed. I have experienced directors ignoring minuted Annual General Meeting instructions and even making decisions other than normal management issues without asking shareholders for majority approval.

Even failure to hold Annual General Meetings within the period required of private companies.

Having interests in both strata title and company title home units in my experience the individual's rights are far better protected via strata title and a managing agent can better manage a building than when there are company directors to answer to and/or to issue instructions before the agent can take action.

Too often resident/absentee company title home unit directors have little or no business experience, but may well have too much self-interest in decision making.

Shareholders have nowhere to go to challenge directors other than to a court of law and then even if a decision is made in favour of a shareholder or shareholders the company directors are able to charge the shareholder or shareholders for their own or the company's costs.

In a not for profit home unit company of shareholder-owners that situation is most unsatisfactory, unfair.

i live in a strata apartment building in newcastle and have been through a nightmare experience that has not finished yet. our executive committee has been taken over by a tyrant who runs things to suit himself.

1. he has the contact details of all the investor owners and has convinced tham to give him their proxies - so out of 70 units he holds more than 30 proxies. attempts by other owners to obtain those contact details has been refused by the strata manager who knows the tyrant has the power to renew his employment contract. i am sure it is illegal to withhold the details that but we cannot find a way around it. the notion of a single person holding so many proxies is "unsafe".

2. he had by-laws passed allowing him and a few cronies to legitimise existing external shade structures of varying colours and materials that they had erected, without development consent from council.

3. there was no discussion paper produced outlining the case for the shade structures.

5. without any discussion papaer, he arranged for a by-law to be passed prohibiting erection of storage sheds at the rear of carparking spaces in the basement carpark- even though the area used was excess of council's minimum dimensions for carparking - the reason was he has a small carparking space and said to us "if i can't have one then nobody gets one." the reason given for refusing storage sheds was that we did not have development consent from council. so we applied to council, but 8 months later he had the by-law passed prohibiting the sheds. council then considered the d/a and the retrospective by-law but granted consent, because of the existence of S.28 EPA act, which allows such intruments to be suspended.

the owners corp. then went to the CTTT, a corrupt organisation, and asked for orders to demolish the shed which had development consent, a construction certificate and an occupation certificate.

the CTTTdid not even read our submission in response, yet ordered that we demolish the shed. CTTT eventually apologised for the error in not reading it but said that its orders still stand. the file only contained 2 documents - the 3 page application and our 9 page response - yet the adjudicator claims she did not see it - IMPOSSIBLE !

we appealed but lost the appeal .the reason was that the corrupt CTTT ruled that the clause in the local LEP which was to reflect the intention of S.28 of the EPA act, restricted the suspension provisions to a genre of regulatory instruments that did not include a by-law. this was pure fiction from the CTTT, in the face of overwhelming evidence from dept of planning, council planners and the decision of the councillors themselves in originally granting the consent. the purpose of introducing S.28 into the act was precisely to avoid this situation. S.28 needs to be reviewed/strengthened in order to avoid a repetition of this ruling. the development consent continues to remain current and valid, yet a by-law made up by a bunch of neighbours is given primacy over it by a corrupt organisation - all done to validate the original error of the CTTT.

6. we finally pointed out to the CTTT that in order to demolish the shed, development consent needed to be obtained from council under Cl. 46 of NCCLEP. again the corrupt CTTT ruled that the shed was not a "building" and therefore did not require consent to demolish - even though council said it was.

CTTT cannot rule on the EPA act and cannot make the decision as to whether council requires consent - that is a decision for council. it is a criminal act for us to demolish without consent, yet CTTT fined us $500 for not complying with its orders to demolish. a series of corrupt decisions by CTTT all done to validate its original error in reading our original submission.

i am not really sure where the legislative changes need to be made but we have written to CTTT, minister for fair trading, premier, minister for planning, ICAC, NSW Ombudsman, attorney general and council but nobody will help. HELP!!!!!!!!!!!

The LEC in Castelreagh Street have the power to overrule Council explore whether they have power above the CTTT. I completely feel for you. I got a neighbour who mde an ugly out of character addition that has devalued the value of the entire scheme, but My apartment is next to this ugly yellow eyesore.Council did zero, but there will be a Council election SOME DAY. I sympathise with your position..The Laws and intreptation its a joke and its disastrous unless the Legislation is reformed and strong enforceavble laws are implemented, he values of Apartments will suffer.

Hi to fellow multiple occupancy dwellers. This may be a suitable time to have a say on multiple occupancy (MO) title laws as it is relevant to strata and community title laws. It would be interesting to hear from people in all walks of life and in different areas to see if there is a common thread among pros and cons of MO title laws and to see if change in this area is also warranted. Looking forward to valid and objective discussion. Di

I've asked on a number of occasions to see the documentation and correspondence for the Strata Plan I belong to (as an owner) and each time I am told by the Secretary that I would need to make an appointment and pay the same fee that prospective buyers have to pay when doing their SP checks before purchase. As such, myself and other owners are left in the dark as to correspondence about our SP if we are unable to find an approporiate time and stump up with a fee to see information which is about he organisation to which we belong. Even as the Chairperson, I am not privy to communication from other owners with the EC as the Secretary does not share that information on the grounds some owners have asked for privacy.

I'd like to see the viewing fee waived for up to 2 viewings of the SP documentation per year. The viewing should be of ALL documentation including strat plan, owners, etc Additionally, I'd like the legislation to state that all communication received and sent out by the secretary must be copied to all other members of the EC. I'd also like to see all owner details being given to each member of the EC to enable communication to be more open.

I am also in agreement with the suggestion in this forum that all owners should be given a copy of the by-laws on first owning their apartment. I am constant told I cannot do something as it is illegal but am never shown the by-law that out-laws such actions. This just creates friction.

Without full disclosure, it is very hard to make informed decisions or manage the SP.

To examine the records of a Strata Plan for those who are owners/ Body Corporate members ,this should be a FREE SERVICE. " Potential purchasers should pay a fee , but not owners, this will allow owners to have a more comprehensive understanding of the "hapenings" in the scheme.

A legally binding Attachment as an integral part of all future Contract of Sales.

A copy of the By Laws on first owning their apartment" johnmc. My suggestion is that the By Laws and Additional written information relating to procedures/ important regulations that govern a Strata Scheme in a easy and simple to understand outline (not the Legalspeak) be provided by the relevant authorities ( CTTT and Land Titles/registration) to all future owners. This document / attachment or procedural outline should be included in every CONTRACT OF SALE for all apartments from a future designated date.

In real terms a Legal ATTACHMENT of the By Laws n Regulations included in the Contract of Sale that is a compulsory condition that the purchaser has to READ and SIGN, this will assist the buyer to understand the By Laws /Regulations/Meetings and voting procedures. Owners then should have a more grounded understanding of the Regulations and this should limit future problems that may arise re disputes etc. Its not a surprise that a major proportion of owners in Strata Schemes have absolutely no idea or interest in the By Laws and Regulations. One has to start somewhere and the above suggestion just may alleviate and limit future problems. Knowledge is power, ignorance creates disharmony.

Sections 106 and 107 relate to the preparation and audit of financial statements. An audit is required in the case of a large strata scheme.

Where the large strata scheme is also a retirement village as defined in the 1999 Retirement Villages Act, then the audited financial statements must include inter alia a cash flow statement prepared in accordance with the relevant accounting standard. Most members of retirement communities will not understand financial statements prepared using the accrual method of accounting. However a report showing how cash is received and spent is more relevant. The degree of granularity would be the same as the line items that appear in the administrative and sinking fund statements, as well as the accounting standard.

The auditor of the financial statements must also express an opinion (that is one of fact) that those sections of the Act designed to protect the interests of the owners have been complied with. Some examples of the sections are

S73 the investment of administrative \ sinking monies;

·S75A ten year funding plans;

·S80A the limit on spending;

·S80D the approval of legal action; and

·S104 the retention of all required records.

This list is illustrative.

Penalties must include a report to the CTTT where any breach is not remedied within thirty days of detection.

Where the large strata scheme is also a retirement village as defined in the 1999 Retirement Villages Act, then the same limitation as to the number of proxies in the Retirement Villages Act must apply. The limitation of an owner holding a proxy for up two other owners would limit proxy harvesting and create a greater involvement of owners in approving the matters required at an annual general meeting and \ or an extraordinary meeting.

Section 16 allows the owner corporation (at an annual general or an extraordinary meeting) to appoint an executive committee. Section 18 requires the first meeting of the executive committee after the relevant meeting to appoint a chairperson, secretary and a treasurer. The appoint must happen at the general meeting and not any subsequent meeting. This would ensure that the owners elect those that are responsible the management of the owner’s corporation.

As a Proactive Executive Committee Member, I will without hesitation would sign a pledge or an offical Statement of Intention of responsibility and to protect the interests of ALL OWNERS equally and to prioritise issues on their merit and importance,taking precedence over any personal interest. I have requested fellow Office Bearers to sign such a ( preferrably legally binding) Pledge.They will not, they refuse outright. Its a travesty when you have two exec comm members who have breached Sec 65A pts 1-6 and refuse to comply with numerous requests to abide by the regulations. Far too often as I have noted in numerous comments on this site, that certain owners take advantage of their positions on the Executive Committees , they can do this quiet easily as the majority of owners just dont get involved / no idea of the Regulations/ By Laws. Owners who are not on the Exec Committee must become more involved.

In Schedule 3 (model by-laws for retirement villages schemes) of the Strata Schemes Management Regulation 2010, there is by-law 10, which reads

“(1) Except in the circumstances referred to in clause (2), an owner or occupier of a lot is responsible for cleaning all interior and exterior surfaces of glass in windows and doors on the boundary of the lot, including so much as is common property.

(2) The owners corporation is responsible for cleaning regularly all exterior surfaces of glass in windows and doors that cannot be accessed by the owner or occupier of the lot safely or at all.”

It appears that the second clause is often omitted in the by-laws that are adopted by strata schemes. This should not be the case. Also this is a cleaning requirement. Cleaning is not maintenance.

2. Create a Special Task Force that has powers of entry to investigate , audit and inspect the records of Strata Schemes that are held by Strata Managers. This can be effected randomly and wthout warning as per genuine Strata Ownes complaints, Any missing or permanently misplaced documentation (usually shredded) belonging to a Strata Scheme whilst being stored for safekeeping by Strata Manager be instantly penalised with a substantial fine i.e. $2000 and upwards depending on the offence.

3. Eliminate the Strata Managers Agents 10 - 20% Insurance Commission, allow the Owners Corp as an entity to be entitled to the Insurance Commission. An Executive Committee as reprentatives of an Owners corporation ,should be granted "Agents" status providing the Owners to the Commission. A more simple approach would be to obtain a an Insurance Premium Quote without the Built in Commission, this would provide the owners with a greater capacity to increase their Sinking and Maintenance Funds . Make it Compulsory that there be two Insurance quotes for Strata Schemes. For a $10,000 Insurance Premium as it presently stands (majority 20%) in real terms the Insurance is $8000. Most owners who know this see this as a unnecessary backhander. Simply put its a freebie n smells of corruption

4.There should be a compulsory FREE Strata Scheme On Line Accounts Service, provided by the Strata Manager. There are Computer programs that do this and are easily available. Its a simple on line procedure. Owners can view the Accounts, I know of one Strata manager that is in the process of establishing this system. IT CAN BE and SHOULD BE A COMPULSORY CONDITION for all Strata Managers to incorporate this system.

5.Sinking Fund Accounts should not be held or controlled by a Strata Manager. Invitation for financial disaster. This money belongs to the Owners and they should be responsible for their own Sinking Funds. Or it can be held in Trust by a reputable Public Trustee. There is a great deal of tampering and misappropriation of Sinking Fund Trust Accounts by Strata Managers (hidden as owners and Exec Comm are not very thorough) e.g. A Strata Manager controls a Sinking Fund Trust account and the interest component is LESS THAN 1% per annum (its true), consider that there is 5% PLUS available in the marketplace.SOMETHING is FISHY on this one. A minimum interest rate should be established for all Sinking Fund Trusts as per marketplace.

7. Staff of Strata Managers should not be burdened with managing more than 40 Strata Schemes. Some Strata Agency staff "manage' in excess of 90 Strata Schemes. Its too heavy a workload and leads to inefficient / poor service. and unnecessary problems and this creates waste.

8. Conditions of Strata Managers Agency Agreement. This should be on a yearly basis only, the Owners Corp to have a compulsory EGM one month prior to the AGM, O.C. to decide on the terms of agreeement, expenses etc and whether to reappoint the Agent. Conversely the Owners can provide their own Terms and Conditions to the Agent. Clover Moore noted this area and I support her comments, certain conditions are absolutely non binding e.g if an owner is aggreived by actions of a Strata Manager and proceeds with legal action , there are clauses in the Agency Agreement wheras a fee of (in our case) $145 +GST per hour to be payable to the Agent to attend Court. i.e. An owner sues the Agent and the O.C. pay the Agent $145+gst per hour??????????The agents 20% Insurance Comm. On top of the outrageous 20% Commission they charge (condition of Agreement) $145 +Gst per hour, (5 minutes is somehow turned into an hour) to chase up Insurance Claims. There should be a set Agency Agreement established by a relevant Authority, Clearly defined Terms and Conditions that are fair and reasonable to all parties.

9.Defects and Repairs. Strata managers have their "Special Team of Tradies" its kick back heaven and its Common Knowledge that nearly all Strata Managers obtain a Tradies kickback for the Job. Everyone knows except certain Authorities , one being SCA. There should be a compulsory two quotes per repair/ defect job, no matter how small a Strata Scheme i.e. 10 Apartments and above. Fair Trading or Master Builders can provide a costing for scope of works for repairs as a general outline per type of job on a scale system which should include a Building Standard procedures for each repair. This service to be on line and accessible to all O.Cs. Tradies love Strata Schemes they get two three times the norm.

These are just some of the flaws of the system,these loopholes should be permanently shut down. There IS SOO MUCH WASTE of money.

e.g. Clarity of Balcony’s and Car parks, Ownership and Responsibilities

2. Unit Entitlement, Rates, Levies and voting etc.

It would appear that we need to match the Strata Owners Corporation requirements to the unit’s responsibility.

2.1 Levies.

The current primary principle for the establishment of Unit Entitlement’s is to provide a method of proportioning the value of the total strata for insurance or resale purposes, however it is also used for the proportioning of a unit’s contribution (levies) to the Budget.

However, when we consider the Owners Corporation Budget items of Administration and Sinking Funds, these are essentially used to maintain and update the Building Common Plant & Facilities and provide such Common Services as Concierge and Building Management. Consequently it does not appear logical that a units levies should be based on the Unit Entitlement Distribution, as all units have fairly equal use and access to the Common Property. It is understood that other states e.g. Queensland have adopted a different method of allocating Administration and Sinking Fund Levies.

It is worthy of mention that the City Council also have another method of determining the rates paid by units, something nearer the unimproved valuation of the unit. As the use of the Rate Payment is for community facilities , using this method in Strata’s might provide a more equitable method of assessing levies for Administration Funds etc.

2.2 Voting

A secondary aspect of the use of Unit Entitlement’s is to use them to weight the value of a units strata vote, at an AGM or an EGM.

As far as the AGM aspects of voting for the Budget or the Executive Committee Members, these matter are primarily concerning Common Property or Common Matters and similar to the Argument about Levies the unit weighting with Unit Entitlement’s should not apply.

However when fundamental Strata changes are considered e.g. By-laws, perhaps differing rules could apply, although it is noted that the 25% against rules provides significant protection.

2.3 The Allocation of Unit Entitlements, usually by the Developer’s Valuer at the time of registering the original strata plan, has been shown on many occasions to significantly disadvantage many owners, however the legal method of changing these anomalies is complex and extremely expensive as the existing strata law maintains that the whole Strata Plan needs to be re-valued to effect maybe only one anomaly. This situation also needs examination and modification.

3. Some matters supporting Flat Chat (14/1/2012)

(i) After an Owners Corporation review of the by-laws and the adoption of a new set, if necessary, make the enforcement of by-laws obligatory

(ii) Give Owner-occupier an extra vote at general meetings

(iii) Limit the number of proxy votes held by an individual to 5% of the owners

(iv) Have strata disputes heard initially by a panel comprising a strata lawyer, a strata manager and an experienced executive member, based on one simple question: has a by-law been broken or not?

(i)To enable an Owners Corporation to raise a special levy to the sinking fund for unexpected costs

(ii)To enable the CTTT to determine disputes about strata development contracts and strata management statements

(iii)To address overcrowding by limiting the numbers of adults in an apartment to two per bedroom

(iv)To allow notices of meeting, agendas and minutes to be emailed

(v)To allow the executive committee to transact business by telephone or other electronic communication

(vi)To require the strata roll to record:

·Licenses granted by the owners corporation for use on common property

·Plan and approvals for building work on common property and other property in the strata scheme

·Details of loans made to the owners corporation

·Copy of special resolutions passed for additions and alterations or the erection of new structures on common property, and

·An index of all documents.

5 . Other important Issues

5.1 Short Term Rental Introduction

The laws should be strengthened to make it exceptionally difficult for a individual or group of investors to change the DA of a residential block to enable short term/daily rental of residential units

5.2 Pets

A series of “ common sense” guidelines, which needs to be signed-off by the pet owner, should be “modeled”. These guidelines should be to enable the conditional permission of small pets, which is becoming quite common in many stratas.

The benefits of Strata to Government are many: denser population; maximising return on public infrastructure and end-user accountability for managing a property. The benefits to individual Owners of Lots can also be significant. The converse in my view, to Owners of Lots, is that the Strata Legislation and Regulations are now at a point of such complexity that the average individual struggles to understand, comply with, and implement the letter and often the spirit of the Legislation, resulting in community-wide dissatisfaction and avoidable angst.

No doubt Strata is here to stay. So what can be done to simplify and improve the management of Strata and Community Schemes in NSW as it is clearly not possible to Legislate for common sense?

Improving Strata and Community schemes: Why ought any individual who puts their hand up at an AGM be entitled to act as an Office holder at Executive Committee - without any requirement at all for training, skills or knowledge? It just does not make sense that multi-million dollar properties could be managed by people who are "available" for Executive Meetings rather than "competent".

A cost-effect, pragmatic training program for Officer Bearers could be implemented to gradually educate around rights/responsibilities and effective Strata operation. This would hopefully minimize the "dictator syndrome" which emerges in some Strata properties where the Executive Committee develop their own set of rules, play favourites and act in their own interest and refuse to repair and maintain the property - rather than complying with Strata Law and acting in the interests of all Owners of Lots.

Disputes - A safety net for dispute resolution, such as Fair Trading/CTTT will continue to be required. There does need to be an independent umpire when "dictator syndrome" has set in at Executive Committee level. Nor is it adequate to simply say, "if you don't like what's going on in your Strata property, then get yourself on the EC". Not everyone's circumstances allow for that; nor does the Legislation require that all Owners of Lots become EC members. However, the Legislation does exist to ensure the common property is repaired and maintained; and that requirement, according to CTTT decisions, is absolute.

However, the process for Mediation, Arbitration and Appeals has area for improvement in (a) time to process Applications, (b) "teeth" to ensure Orders are complied with (plenty of evidence and actual cases show that deviant ECs are not going to bother to comply with Orders).

Small Schemes: Small schemes are particularly vulnerable to incompetent, unsatisfactory EC administration. Perhaps the test for a small scheme could be amended to consider either (a) number of apartments in the Scheme, or (b) property insured value greater than a particular value, e.g. $10 million dollars.